Earnings

At €4.69 Billion, Group Sales 5 Percent Below Prior-Year Figure of €4.93 Billion

The WACKER Group’s sales in 2020 were lower than the year before. Especially from April through June, sales dropped markedly due to the coronavirus pandemic. The main reasons for the decrease were lower prices and reduced volumes, especially at WACKER . Changes in the product mix also had an impact, as did exchange-rate effects attributable to the year-over-year decline in value of the US dollar. The sales contraction was only slight at WACKER , while WACKER BIOSOLUTIONS posted marginal sales growth. WACKER SILICONES recorded sales of €2.24 billion (2019: €2.45 billion), down 9 percent year over year due to reduced volumes and lower prices for standard products. Sales at WACKER POLYMERS came in at €1.30 billion in 2020 (2019: €1.32 billion), down by a slight 1 percent. Sales at WACKER BIOSOLUTIONS edged up 1 percent to €246.1 million (2019: €243.0 million). WACKER ’s sales rose 2 percent to €792.2 million (2019: €780.0 million), particularly due to higher volumes in the second half of the year.

For further information on the business divisions, please refer to the Segments section.

WACKER generated the majority of its sales outside of Germany. International sales came in at €3.91 billion (2019: €4.13 billion), accounting for 83 percent of the total.

For further information, please refer to the Regions section.

Year-over-Year Sales Comparison

€ million

Year-over-Year Sales Comparison (bar chart)

Group EBITDA at €666.3 Million, with EBITDA Margin of 14.2 Percent

Group declined 15 percent year over year, coming it at €666.3 million (2019: €783.4 million). The EBITDA margin of 14.2 percent was lower than in the previous year (2019: 15.9 percent). Prior-year EBITDA included special income in insurance compensation for the damage incurred following the incident at the Charleston (USA) site in 2017. WACKER recognized this special income of €112.5 million under cost of goods sold. Adjusted for this amount, totaled €670.9 million in 2020. Measured on a comparable basis, EBITDA fell 1 percent year over year. Despite the marked decline in sales in the second quarter due to the coronavirus pandemic, WACKER reduced its cost of goods sold and functional costs thanks to savings made in current non-personnel costs and to lower raw-material costs. That had a positive effect on EBITDA. The efficiency program also includes job reductions. WACKER set aside €48.0 million for voluntary termination benefits in the fourth quarter. These costs had a negative impact on EBITDA.

A positive factor influencing EBITDA was the Group’s income from investments in joint ventures and associates, which amounted to €34.9 million (2019: €54.3 million). Investment income from Siltronic contributed €32.7 million (2019: €51.4 million) to the result from investments in joint ventures and associates.

For further information on the business divisions, please refer to the Segments section.

 (XLSX:) Download XLS
Reconciliation of EBITDA to EBIT

 

 

 

 

 

 

 

€ million

 

2020

 

2019

 

Change in %

 

 

 

 

 

 

 

EBITDA

 

666.3

 

783.4

 

-14.9

Depreciation/amortization and (reversals of) impairments of fixed assets

 

-403.5

 

-1,319.7

 

-69.4

EBIT

 

262.8

 

-536.3

 

n.a.

EBIT Reaches €262.8 Million

Group earnings before interest and taxes () totaled €262.8 million in the reporting period (2019: €-536.3 million), yielding an EBIT margin of 5.6 percent (2019: -10.9 percent). The negative prior-year EBIT was attributable to an impairment charge of €760.0 million recognized on WACKER POLYSILICON’s fixed assets because of low polysilicon prices. In 2020, depreciation and amortization totaled €403.5 million (2019: €1.32 billion, including impairment charge).

 (XLSX:) Download XLS
Reconciliation of EBIT to Net Result for the Period

 

 

 

 

 

 

 

€ million

 

2020

 

2019

 

Change in %

 

 

 

 

 

 

 

EBIT

 

262.8

 

-536.3

 

n.a.

Financial result

 

-44.9

 

-54.9

 

-18.2

Income before income taxes

 

217.9

 

-591.2

 

n.a.

Income taxes

 

-15.6

 

-38.4

 

-59.4

Net result for the year

 

202.3

 

-629.6

 

n.a.

Of which

 

 

 

 

 

 

Attributable to Wacker Chemie AG shareholders

 

189.2

 

-642.6

 

n.a.

Attributable to non-controlling interests

 

13.1

 

13.0

 

0.8

Earnings per share (€) (basic/diluted)

 

3.81

 

-12.94

 

n.a.

Average number of shares outstanding (weighted)

 

49,677,983

 

49,677,983

 

Cost of Goods Sold Lower Year over Year

At €869.9 million, gross profit from sales was 8 percent higher than a year earlier (2019: €803.2 million). The cost of goods sold came in at €3.82 billion (2019: €4.12 billion). The gross margin was 18.5 percent (2019: 16.3 percent). WACKER reduced the cost of goods sold by means of efficiency gains, with lower raw-material and energy costs also having a positive effect. The prior-year figure for cost of goods sold included insurance compensation of €112.5 million posted in September 2019 for the incident at the Charleston site. Inventory valuation adjustments increased the cost of goods sold by €22.5 million (2019: €46.3 million). The Group’s cost-of-sales ratio declined from 84 percent to 81 percent.

Substantial Decline in Functional Costs

Other functional costs (selling, R&D and general administrative expenses) dropped 7 percent year over year to €586.7 million (2019: €633.4 million). This decline stemmed chiefly from a reduction in non-personnel and travel costs and from efficiency gains across all departments.

Other Operating Income and Expenses

In 2020, the balance of other operating income and expenses was €-57.4 million (2019: €-760.4 million). Other operating expenses included €48.9 million for termination benefits under the voluntary program. Most of these benefits will be paid out in 2021. In the previous year, other operating expenses had included an impairment charge of €760 million on WACKER ’s fixed assets. Foreign currency losses of €-7.8 million (2019: €-12.7 million) lowered other operating income and expenses.

Result from Investments

Due to lower investment income from Siltronic AG, the result from investments in joint ventures and associates fell, coming in at €34.9 million (2019: €54.3 million). Investment income from Siltronic was €32.7 million (2019: €51.4 million).

Financial and Net Interest Result

WACKER’s financial result improved year over year, amounting to €-44.9 million (2019: €-54.9 million). Interest income was €8.1 million (2019: €10.6 million) and interest expenses reached €22.0 million (2019: €20.3 million). The net interest result was thus €-13.9 million (2019: €-9.7 million). WACKER took on further financial liabilities in 2020 in order to enhance its liquidity.

The other financial result was €-31.0 million (2019: € -45.2 million) and included lower interest-rate effects from provisions for pensions and other provisions as well as exchange-rate effects and the cost of derivative financial instruments used to hedge Group loans.

Income Taxes

WACKER reported tax expenses of €15.6 million for 2020 (2019: €38.4 million). The Group’s effective tax rate was 7.1 percent (2019: 22.7 percent, adjusted for the impairment charge of €760 million). Recognized after tax, the investment income from Siltronic AG, which formed part of pre-tax income, reduced the effective tax rate, as did tax-free income and taxes relating to other periods.

Group Net Income

As a result of the effects mentioned, Group net income was €202.3 million, compared with a net loss of €-629.6 million in the previous year.

Return on Capital Employed (ROCE)

The return on () sets earnings before interest and taxes () in relation to the capital employed for business activities. Investment income from Siltronic and the corresponding carrying amount in equity are not included when calculating ROCE.

In the reporting year, ROCE was 5.6 percent (2019: -11.3 percent). The main reason for this rise was a marked improvement in EBIT. Capital employed declined due to higher working capital, decreasing from €5,183.5 million to €4,111.4 million in the year under review.

Silicones
General term used to describe compounds of organic molecules and silicon. According to their areas of application, silicones can be classified as fluids, resins or rubber grades. Silicones are characterized by a myriad of outstanding properties. Typical areas of application include construction, the electrical and electronics industries, shipping and transportation, textiles and paper coatings.
Polymer
A polymer is a large molecule made up of smaller molecular units (monomers). It contains between 10,000 and 100,000 monomers. Polymers can be long or ball-shaped.
Polysilicon
Hyperpure polycrystalline silicon from WACKER POLYSILICON is used for manufacturing wafers for the electronics and solar industries. To produce it, metallurgical-grade silicon is converted into liquid trichlorosilane, highly distilled and deposited in hyperpure form at 1,000 °C.
EBITDA
Earnings before interest, taxes, depreciation and amortization.
EBITDA
Earnings before interest, taxes, depreciation and amortization.
EBIT
Earnings before interest and taxes: EBIT is a good indicator for comparing companies’ profitability, since it is widely used across the corporate world.
Polysilicon
Hyperpure polycrystalline silicon from WACKER POLYSILICON is used for manufacturing wafers for the electronics and solar industries. To produce it, metallurgical-grade silicon is converted into liquid trichlorosilane, highly distilled and deposited in hyperpure form at 1,000 °C.
Capital Employed (CE)
Capital employed is the sum of average noncurrent assets (less noncurrent securities and deferred tax assets), plus inventories and trade receivables (less trade payables). It is the variable used in calculating the cost of capital.
Return on Capital Employed (ROCE)
Return on capital employed is the profitability ratio relating to the capital employed. It is defined as earnings before interest and taxes (EBIT) divided by capital employed. Investment income from Siltronic AG and the corresponding carrying amount in equity are not included when ROCE is calculated. ROCE is a clear indicator of how profitably the capital required for business operations is being employed. It is influenced not only by profitability, but also by capital intensity with regard to noncurrent assets required for business operations and to working capital. ROCE is reviewed annually as part of our planning process and is a key criterion for managing our capital expenditure budget.
EBIT
Earnings before interest and taxes: EBIT is a good indicator for comparing companies’ profitability, since it is widely used across the corporate world.

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